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Why Apple Can't Make iPhones in America

BEGIN TRANSCRIPT

RUSH: The New York Times over the weekend had a story about why Apple's products are assembled in China.  Why aren't they made in America.  Apple has something like 43,000 employees in America, not counting the retail employees, 43,000 employees at their headquarters in Cupertino.  It's a long piece that prints out to 14 pages.  It recounts the fact that Obama once had dinner with all these high-tech guys out in California, Jobs and Zuckerberg and so forth, and at that dinner Jobs told Obama, (paraphrasing) "These jobs are never coming back, Mr. President, and we don't understand why you say that nothing can be done about this.  This is the greatest country on earth.  These particular jobs, the flexibility we need cannot happen in the United States." And this New York Times story spells it out.  As I say, they leave out one crucial factor here and that's unions, to help explain why manufacturing in America can't compete with the way the ChiComs do it. 

Let me give you a fascinating statistic that will put this in perspective. The primary manufacturing company for Apple's products is called Foxconn, Hon Hai Precision Industry, and they make electronic gadgets for practically everybody. Apple is one of their largest customers. They have, at one factory, 230,000 employees. One factory: 230,000 employees. Most of them live in dormitories on the site of the factory. There's a hospital, there are kitchens. This place goes through... I wish I could remember. The tonnage of pork and rice every month this place goes through to feed its employees is astounding. They have 230,000 employees in one factory. They work six days a week, 12 hours a day. They earn the equivalent of 17 US dollars a day, and they are plum jobs in China.

They could fill 3,000 new jobs a day, based on applications. By contrast, there are 50 US cities with 230,000 people. Adults. There are 83 US cities with a total population of 230,000. There are 50 US cities with an adult population of over 230,000. Here is a factory, and that's just one of Foxconn's factories. Now, one example is cited of what can be done in China that can't happen in America. They also talk about they were able to fill 8,700 engineer openings -- not assembly line workers, but engineering jobs -- in 15 days. It is said in the story it would take a US company, with all the legal hurdles and everything, nine months to find that many. Now, let's go to the iPhone.

Something like two months before the iPhone had been announced and the release date had been announced, and everybody couldn't wait for the iPhone, Steve Jobs discovered a huge flaw. He had the phone in his pocket with his keys, and after a while, the plastic that was the screen got scratched repeatedly because of his keys. He pulled it out of his pocket, he showed his design team, and said, "I'm not taking this to market. I don't care. If you can't fix this in five weeks or four weeks, we're pushing back the release date. Can't do it. You get it done. I want a new screen. I want a non-scratchable screen on this phone in six weeks."

The first thing Jobs did... He had heard about something that Corning had invented called Gorilla Glass. So he went to the Corning CEO. The Corning CEO said, "Oh, yeah, we've got Gorilla Glass. We designed it. That's 30-year-old technology. We don't make it; we're not geared up for it." Jobs said, "Don't be afraid. You can do it." Gorilla Glass came into existence, the Corning people did it. The ChiComs at Foxconn were able, in six weeks, to redesign and remanufacture millions of iPhones with this new screen that had been demanded six weeks prior. The environmental studies necessary for this kind of change would have taken years in America, plus the other obstacles. There simply isn't, and never has been, a factory in this country that could produce this.

They're gonna produce something like 50 million iPads this year. The number of iPhones is almost twice that. They sell these things worldwide -- and that's just one factory of 230,000 employees. Sixty thousand of these people live and work at the factory. "Many of the people at 'Foxconn City' work six days a week, twelve hours a day, and they earn less than US$17 per day. It may sound inhumane by American standards, but these jobs are in high demand in China -- so much so that Jennifer Rigoni, former worldwide supply demand manager for Apple, told the New York Times that Foxconn 'could hire 3,000 people overnight.'" That's how many people want to work there. "Those are just a couple examples of how the scale, speed, and efficiency..."

There's another aspect of this. All of the parts that go into an iPhone are made within 25 miles of the factory that assembles them. So if Apple wanted to, they'd have to ship all the parts either by air or by boat across the Pacific Ocean. It makes no economic sense to do it any other way that they're doing it, and they got hold of some Apple executives for this story, and one Apple executive (who's not identified) said, "We sell iPhones in over a hundred countries. We don’t have an obligation to solve America’s problems. Our only obligation is making the best product possible." And they found out how to do it, and found out how to do it the cheapest and most efficient way. Really, it's a fascinating piece. The one thing that is not mentioned in this whole story is unions.

Of course there aren't any in China. You couldn't get any of this done in modern-day America. So all the clamor for manufacturing jobs and why evil American companies leave: The systems, the ecosystems, the supply chain, it just doesn't exist. Nor does the labor price, obviously. But it is a fascinating thing. In World War II we used to do it. Yeah, in World War II we used to build things. We built the Golden Gate Bridge, the Bay Bridge, and the Empire State Building in the same five years. You know that? In the Depression. In the Depression, in the thirties. What we did in World War II, the world has never seen in terms of manufacturing, output of major, big, large things. There's no question.

Here it is. The Foxconn "central kitchen cooks an average of three tons of pork and 13 tons of rice a day." To feed these people, three tons of pork, 13 tons of rice a day! This factory's in Shenzhen, by the way, but there are Foxconn factories all over the place. What US company could find 3,000 people overnight and convince them to live in dorms to work 12 hours a day, six days a week? Here's another thing: "Apple’s executives had estimated that about 8,700 industrial engineers were needed to oversee and guide the 200,000 assembly-line workers eventually involved in manufacturing iPhones." You need some engineers watching this. "The company’s analysts had forecast it would take as long as nine months to find that many qualified engineers in the United States. In China, it took 15 days." And that's how they were able to get the iPhone out on time.

BREAK TRANSCRIPT

RUSH: Now, look, I know some of you were shouting at the radio. I know. They had a problem. In 2010, a number of Foxconn employees committed suicide at work to protest poor working conditions and low pay. It's not a panacea. I don't mean to say that that's nirvana over there. In fact, after the suicides, managers at the Foxconn factories "ordered staff to sign pledges that they wouldn't commit suicide anymore." No, they did -- and then they said, if you do commit suicide, your families will only seek the legal minimum in damages.

They had to sign that. Promise you won't commit suicide, and if you do, you only get the legal minimum and that's it. They made 'em sign that. Now, the point of this is this just wouldn't happen here. It couldn't happen here. iPhones aren't made in America 'cause they can't be. The infrastructure, the labor force doesn't exist at the levels necessary to support Apple's operations or the demand. It just can't happen, not the way things are currently structured in America. These circumstances I described: 60,000 living at the factory, within a block? Not gonna happen here. Hence jobs Americans won't do anymore.

BREAK TRANSCRIPT

RUSH: By the way, that Apple story, that iPhone story in the New York Times, that is an attempt by the New York Times, that's an attack on Apple. I want you to understand, I shoulda said that at the outset.  That 14-page story is an attack on Apple.  Let me give you a quote from early in the piece by a guy named Jared Bernstein, who, until last year, was an economic adviser to the White House.  He said, "Apple’s an example of why it’s so hard to create middle-class jobs in the US now. If it’s the pinnacle of capitalism, we should be worried."  Apple is an example of why we can't create middle-class jobs.  So here's Steve Jobs, Apple, big Obama supporter, here comes the regime going after Apple for not making iPhones in America, gets the New York Times on the case. 

END TRANSCRIPT

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